Major Equity Averages Face Weekly Chart Downgrades

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The five major equity averages ended 2021 with positive weekly charts. This is no longer the case at the end of the first week of 2022.

The Dow Jones Industrial Average (DJI) set its all-time intraday high of 36,952.65 on January 5. Its weekly chart is positive. The S&P 500 Index (SPX) set its all-time intraday high of 4,818.62 on January 4. Its weekly is positive but overbought. The Nasdaq Composite (IXIC) set its all-time intraday high of 16,212.23 on November 22. It’s declining towards its 200-day simple moving average at 14,681.41. Its weekly chart is negative.

The Dow Jones Transport Average (DJT) set its all-time intraday high of 18,246.51 on November 2. Its weekly chart is neutral but becomes negative given a weekly close below its five-week modified moving average at 16,150.58. The Russell 2000 Index (RUT) set its all-time intraday high of 2,458.86 on November 8. Its weekly chart is neutral, but the index held its semiannual and annual pivots at 2,118 and 2,106 since the week of January 15, 2020.

The closes for December 31 established key levels from my proprietary analytics. I have monthly levels for the month of January, quarterly levels for the first quarter of 2022, semiannual levels for the first half of 2022 and annual levels for all of 2022.

Traders and investors need guidelines to assess the risk and reward of the stock market and all stocks traded on the Exchanges. I use daily and weekly charts and the levels from my analytics.

My daily chart shows price bars for each day going back one year. I include the 50-day and 200-day simple moving averages. A golden cross occurs when the 50-day SMA rises above the 200-day. A death cross occurs when the 50-day SMA falls below the 200-day SMA. I like to buy weakness to the 200-day SMA. Horizontal lines below the stock price are value levels from my analytics. Horizontal lines above the stock price are risky levels from my analytics.

My weekly chart shows price bars for each week going back five years. I include the five-week modified moving average and the 200-week simple moving average. The study along the bottom of the chart is the 12x3x3 weekly sow stochastic reading which scales 00.00 to 100.00. A reading above 80.00 is overbought. A reading below 20.00 is oversold. Rising between 20.00 and 80.00 is positive. Falling between 80.00 and 20.00 is negative. A reading below 10.00 indicates that the stock is ‘too cheap to ignore.’ A reading above 90.00 indicates that the stock is in an ‘inflating parabolic bubble.’

Please reference this article as a guideline to my methodology.